December 6, 2013

The President and the media are trying to get us to talk about income equality. I know, it's an effort to distract us from the obvious problem of the Obamacare debacle (which itself is probably a distraction from other things we shouldn't/should be looking at). But I was motivated to Google "minimum wage over the years adjusted for inflation."

IIRC, the minimum wage in the late 1950's was $0.90 to $1.00, which would equate to about $10 today.

There tends to be a lot of hullabaloo and predictions of doom, one way or the other, about increases in the minimum wage, but actually they just catch the official number up to approximately where the effective number is.

How dumb do you need to be not to look at this graph and suspect that 1968 was chosen as the starting point because it was an upward spike?

1969 was the last year the US Mint put 40% silver half dollars in circulation (they had removed it from dimes and quarters in 1965). The intrinsic value of our currency has lessened each year since, endlessly seeking new asset bubbles to grow and pop.

I think I'd like to see some economists do something crazy and offer to do math to index minimum wage to unemployment/workforce participation. So, as you have more unemployed people, minimum wage drops to help absorb the workers at the margins. As you have fewer, you get higher minimum wage to help people at the bottom.

Of course, this is just doing what we think the free market will do anyway, but, it'd be an interesting economics exercise.

What the second chart reveals is that while the nominal minimum wage legislated by congress has increased at an accelerating rate over time, especially since 1968, real purchasing power has been eroded even faster by inflation.

how stupid do you have to be to NOT understand that wages are a function of the supply/demand for labor? Or that some labor commands a higher wage scale than other labor? In my view, it ties back to immigration, education, and the mantra of "a college education guarantees you better pay" (tell that to the Barrista with a philosophy degree and $100,000 in student debt)

I think that each opponent of the minimum wage should have to work for that at some point in their lives, though I suspect most of us have.I also think that the advocates of a higher minimum wage should have to run a business and learn what it's like to meet a payroll and higher workers in low skill jobs.I highly doubt that many have.

If you linked the Federal minimum wage from its inception, in 1938, to inflation, it would be roughly 2/3 what it is now. This is why people calculate from 1968 rather than 1938. You take the peak, assert that this is how it should be, and extrapolate from there.

“While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control.

A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule,” – Pope Francis.

I think that each opponent of the minimum wage should have to work for that at some point in their lives, though I suspect most of us have.

I have worked for far less than minimum wage. Cf. Berkeley Symphony, where the union players get "scale," and the non-union players get ... well, "enough to pay for the parking." Berkeley Opera, when I was its concertmaster 20-plus years ago, was $10 a rehearsal, $15 a performance. Rehearsals being two-and-a-half hours long, you understand, and performances more like three.

Since states can raise the minimum wage above the federal minimum, what is to complain about. Go to your state and get them to raise it, like some states have done so. Of course, those states have higher unemployment.

I should add that I've written for "ten cents a word." If you are a fairly careful writer, that is also way under minimum wage. I have a program note that I'm working on now that is $350 for 2000 words, so the rate has improved. Still, it's going to take me more than enough time, in toto, to put it below minimum wage.

The original minimum wage is $4.07 in today's dollars. Several years back (6?) I spent a summer working as a laborer on a house framing crew for $8/hr. Considering the nature of that work, I'd say $4/hr is about right for someone tapping on a cash register.

The issue is cost of living. The issue is misalignments in economic development. The issue is free, but not equitable trade. The issue is millions of illegal aliens competing with similarly low-skill and low-knowledge Americans. The issue is progressive debt in both the public and private domains. The issue is the most expensive, but only marginally successful, education system in the world. The issue is expensive out-sourced or "green" energy production. The issue is Obamacare, which is a fiscal and political scheme consisting of increased revenues and subsidies. The issue is abortion of around one million Americans every year. This is a comprehensive dysfunctional or corruption convergence motivated by diverse interests.

Several years back (6?) I spent a summer working as a laborer on a house framing crew for $8/hr. Considering the nature of that work, I'd say $4/hr is about right for someone tapping on a cash register.

Well, that depends very much on how bitchy your customers are. Working a register can seriously suck. (Been there, done that.) Would rather have been framing houses, honestly.

The current pope has a notable obsession with money and wealth. To the extent that he even marginalizes the so-called "social issues", including unprecedented (classified by number of victims and viciousness) crimes against humanity (e.g. elective abortion). He seems to think that money and libertine (i.e. liberal) behavior will promote the moral development upon which his religion is founded.

When I worked for minimum wage at the mall, I believe it was $3.65/hr. I worked hard (OK, not hard, honestly, but harder than the rest of the teenage slackers), was named employee of the month and got raises twice in one summer.

But that's no way to raise your wages, the government should really do it.

Raise the pay of the enty level fast food worker who has just arrived in the business and you have to bump up the more experienced workers who have learned the job. And so on up the line. Minimum wage earners, and I have been one, do not remain so for long.

The pope has seen little of the world, especially of America where he would find that our poor live like Nero compared to the people he thinks of as poor.

"Pope Benedict observes that too many economic actors were making decisions “based on very short-term thinking.” They lacked a commitment to “long-term consideration of the common good,” and by pursuing short-term gain in financial markets, they undermined the market itself. For this reason, markets, and financial institutions must be appropriately regulated for the common good."

Seriously, The minimum wage worker here is making 13 times what a low wage earner in Mexico is making, I would recommend that anyone living in the USA earning the minimum wage not take too much comfort in the popes words, When you consider that the vast majority of the worlds population lives on something like 2$ a day you will see who the popes words are actual directed at.

It's interesting to think of how a $15/hr minimum wage will play out in terms of a black market.

Chain stores and fast food restaurants will get hammered. Many non-chain restaurants will go under. But others will survive by illegally underpaying workers in cash. One example: My wife once worked as a short order cook in a dive bar. After a year the owner of the bar gave her a "raise" by paying her the same but reporting less of it to the IRS.

Professional lawn care services will follow the same pattern -- those that don't just fold. At the same time, individuals, working for cash, will fill the void. Teenagers that can't get work at a fast food chain or local grocery store will do well to mow lawns for cash.

Individual proprietors will flourish in this economy.

Last year we hired a carpenter to do some work on our barn. He based his estimate on us paying him $20/hour and his assistant $10/hour. His assistant was his teenage son.

Matthew Sablan is quite right. Higher wages might mean fewer jobs, but it also means the jobs that remain are better. It's a trade off neither side seems willing to look at.

That said, the reality is there is no strict inverse relationship between wages and unskilled jobs. Skilled labor is paid based on some assessment of the value of the work. Unskilled labor is paid based on whether someone else is willing to do it for less. The libertarian ideal of workers freely bargaining their skills is a fantasy. That's not how it works.

The "higher wages mean fewer jobs" claim is simplistic. Sure, there is a price-point in there somewhere where rising wages will eliminate jobs, but the current wage levels are not set at that point so you can't make the straight-line claim that minimum-wage opponents like to make.

It does no good, getting back to Matthew's point, to ignore the values aspect. What level of treatment are we willing to accept for people in the lower levels of society? My own value system tells me that a person with a full time job should be able to live on what he makes, two people with full time jobs should be able to raise a child on what they make.

If a particular job can't exist while paying a living wage (and I am not defining a "living wage," but would welcome a good-faith discussion on it), then maybe that job shouldn't exist. (Just as any product that can't be sold at a profit will be discontinued, maybe a job that won't support the person doing it should be discontinued.)

Is it really better to keep people toiling in penury than to be forced to look as a society at how we develop and employ our members' talents?

I'm not sure where the pope is going with his comments but he sounds like he comes from a failed third world country. Perhaps that is appropriate for a religious leader whose job is to represent his parishioners but he is definitely not an economist.

The question raised on Fox News is whether Pope Francis turns out to be the Catholic church's version of Obama who alienates long time friends and embraces enemies who will never be your friends.http://www.foxnews.com/opinion/2013/12/04/pope-francis-is-catholic-churchs-obama-god-help-us/

"If a particular job can't exist while paying a living wage (and I am not defining a "living wage," but would welcome a good-faith discussion on it), then maybe that job shouldn't exist. (Just as any product that can't be sold at a profit will be discontinued, maybe a job that won't support the person doing it should be discontinued.) "

-- So, you'd rather those poor people who have to work two jobs or live in a really bad area, have... no jobs?

That's the flip side. You can't just obliterate low-paying jobs because, income equality. New jobs won't spring up to replace them (as McCain said, a lot of the jobs we've lost are just GONE. They're not coming back.)

Heather said...If people can't feed their families on a minimum wage. Why not increase the Earned Income Tax credit? It would seem to do less damage to the economy. Isn't that is what it is there for?

Yay Heather! Shift the burden away from those providing jobs to unskilled labor. Unfortunately current EITC is unbelievably small unless you have a number of dependents (again with the perverse incentives!)

Makes you wonder how retail chains like Costco can be profitable by starting their employees at 11.50/ hour, with great health insurance plans. Fast food joints like Moo Cluck Moo’s in Detroit and In N Out pay way above minimum wage. Maybe they're just better business people than the Walmart and McDonalds of the world.

Matthew Sablan said..."That's the flip side. You can't just obliterate low-paying jobs because, income equality. New jobs won't spring up to replace them (as McCain said, a lot of the jobs we've lost are just GONE. They're not coming back.)"

McCain is correct that the particular jobs which have gone are not coming back. Part of that is due to one sided free trade in which the Chinese practice mercantilist trade policies and we give them unfettered access to out own markets. If the playing field were leveled and if we had a little more unfettered capitalism in our country with fewer, better thought out government regulations the jobs would come back. As manufacturing jobs give way to automation people need to be moved into service jobs. Thus service jobs will become a larger part of our economy. One of the areas in which service jobs provide a living for thousands of middle class people is the health care industry.

With the aging population healthcare jobs should be plentiful. Unfortunately the bean counters have decided that healthcare must not grow relative to the rest of the economy which ultimately means that the wages in the healthcare industry must be suppressed, fewer individuals will be employed in the healthcare industry, and healthcare must be rationed (hence the death panels).

When the government is screwing up 1/6th of the economy, is at war with other parts of the economy like the coal industry and produces destructive regulations (an example is mark to market) it is irrational to then turn around and complain because there aren't enough jobs and that the wages are too low when there are dozens of people competing for each job opening.

Used to be when Congress was doing something reprehensible some member or two would wheel out some flag burning legislation and it would draw all of the media's attention for a week or so while Congress ground sausage. The minimum wage is the new flag burning, and Obamacare is the new sausage.

Makes you wonder how retail chains like Costco can be profitable by starting their employees at 11.50/ hour, with great health insurance plans. Fast food joints like Moo Cluck Moo’s in Detroit and In N Out pay way above minimum wage. Maybe they're just better business people than the Walmart and McDonalds of the world.

Nearly every policy idea I've heard out of the administration has been driven by political coalitions, often crude and in need of 'organizing,' run by those thinking they know what is fair and just for everyone. These coalitions try and cram laws through and, failing that: message, demonize, blame and focus on 'the enemy'

Gov't is a big shiny toy run by 'the right people.'

Too many older cars on the road? Use the gov't to give money to car dealers and incentivize people to destroy perfectly good cars by giving them taxpayer money.

Veterans coming back from war? Try and round them up along with your political coalitions into Park Service jobs paid for with taxpayer money. I'd bet they'd unionize if they could.

Gun control? Use a tragedy and politicize the debate, rally around your righteous truth even if there's plenty of reasonable and Constitutional opposition.

Stir the pot. Divide and conquer.

Rising Health-Care costs? Make promises you can't keep, co-opt the Democratic party and pass a huge, backroom dealt pork-monster keeping the worst of the old system and adding huge layers of gov't bureaucracy filled with your pals and cronies...you guessed it.... paid for with taxpayer money.

Not a single vote from the opposition.

And the consequences which may well be causing more harm than good DON"T MATTER.

I see a pathetically cowed media, torn between market forces, cultural trends, technology and what are usually more liberal ideals bent under the race narrative, guilt, the office of the Presidency and the popular opinion-monster they've helped create.

This is the most inexperienced, progressive, further Left, biggest-gap-between-action-and-words Presidency of my lifetime by far.

...My own value system tells me that a person with a full time job should be able to live on what he makes, two people with full time jobs should be able to raise a child on what they make.

Three cheers for your values! Go start a business and employ both your values and lots of workers. I genuinely wish you success and fortune.

However, when it comes to your using government power to impose your values on the rest of us, please just shut up. I'm tired of having others lecture me about their morality and values demanding that we legislate more and more of what's done in society. We had a debate not too long ago about society's lack of authority to legislate minor things like abortion. Well, if society doesn't have the moral authority to weigh in on whether or not it's legal to kill an unborn child, it surely lacks the moral authority to tell me what wage I can accept.

As for morality, consider the following true example: Years ago I worked at a furniture mill. The mill employed a disabled man (nice guy, really low IQ) as sort of a custodian. The man "earned" minimum wage for his efforts. I used scare quotes because the rest of the employees really did the cleaning of the mill. The guy really couldn't even push a broom.

Why was he "employed" by the mill? The owner knew the man's family and wanted to help. The job gave the man dignity and some cash. If you got your way, would really insist that the mill owner pay $15/hr for this man's work?

Garage, you need to learn more about Costco's Worker's Paradise. Hint-many of the workers y you see in your local Costco aren't directly employed by Costco and therefore not the beneficiary of that wage. In addition, Walmart and Costco are very different businesses with very different customer bases.If Walmart choose it's cosine base to be more like Costco, those who couldn't afford Costco would be out of luck.

Besides the problems caused by the government which contributes to low wages for the unskilled there is another issue I forgot to mention. When a government deliberately floods the market with foreign labor because supposedly there are jobs Americans won't do that is a deliberate attempt by the government to suppress the wages of those people who have to compete with the imported foreign labor. When a president like Obama schemes day and night to bring in millions of uneducated workers from other countries to compete with out own low skilled folks it is extremely cynical for him to express dismay when the wages for these jobs is low. It is even more cynical to blame the employers for the depressed wages when he knows full well he is flooding the market with competitors for our native born labor.

Rusty said..."McCain is correct that the particular jobs which have gone are not coming back.

Not necessarily. Comparative advantage can shift back and forth for various reasons."

I agree with your position. The point I was making is that the manufacturing jobs are changing so fast that the new jobs will be different than the old ones. As manufacturing becomes more efficient fewer people will work in manufacturing and more need to move into service related jobs like healthcare.

Tim, w hen you reduce the number of jobs in ore to make the jobs better over all, the people with the highest skill level will get them, making things worse for those who most rely on the minimum wage.So while you're being nice to those who end up with jobs, you hurt the others.

While you're values are admirable, really you end up choosing different losers.I would guess that's not what you had in mind.

I've worked for minimum wage. I don't have any great objections to raising the pay, but, realistically, there's an increase that will cause more workers to lose their jobs than to profit from the increase......Two facts about minimum wage jobs: they suck, and they're better than being unemployed........The utter suckiness of most minimum wage jobs has caused many young people to stay in school.

My own value system tells me that a person with a full time job should be able to live on what he makes, two people with full time jobs should be able to raise a child on what they make.

My own value system tells me that a good and decent person should never die young of a terrible cancer. And also that all children should be above average, and cars should get a billion miles per gallon.

It's the same thing the lefties do when discussing ExxonMobils profit numbers. The lefties just quote the total profit number as if it is some magical stand alone figure.

Most of the LIV's like garage don't understand rate of return and profit margin.

I had a conversation with a "friendly" lefty some time back and was actually able to make her understand the key concepts and she was shocked to learn just how much greater the return on investment is for tech companies, hollywood production companies (talk about tax breaks!!) than for oil companies.

taxpayers are subsidizing those low wages in the form of government aid for their workers

Why do people keep saying things like this? Government aid, with the notable exception of the EITC, generally shifts the labor supply curve in a direction unfavorable to employers. (If you can get food stamps, you can get by with working fewer hours; anyone who wants you to work the extra hours for them anyway will have to pay you more for it.)

Maybe Garage is right and Costco and Wal-Mart should just reorient their entire business models to serving affluent, educated consumers instead of the mass markets they serve now. Yeah, that's the ticket!

Globalization will tend to equalize wages in poor and rich countries, and automation reduces the value of routine work (sometimes to less than zero).

Both trends are the engines behind increasing inequality.

A job just can't pay more than the employee is producing in value (unless it's a government job, or subsidized). Thus a decrease in minimum wage seems inevitable if the value of low-skill labor itself is decreasing.

Yet the opposing worldview seems to be that minimum wage should just go up and up forever. And it just can't do that unless the value of this labor is also increasing.

In 1968 the minimum wage could increase without raising unemployment because demand for labor (and the products of that labor) was so strong that few were actually working for the minimum anyway. That is not the case today.

Raising the minimum wage to more than such labor is worth is an exercise in magical thinking- the labor isn't worth more just because you think it should be.

The bottom line is, either people earning minimum must learn to live with it, or there must be more transfer payments (EITC, SNAP, etc.) to provide a better life for those willing to work yet unable to produce labor of greater value.

4.7% of hourly wage earners are paid minimum wage per the BLS. Of that, the majority are between 16 and 19. 64% of them are part time.

Minimum wage jobs are important stepping stone jobs and to raise the rate will be to tamp down the demand. We already have a huge number of unskilled unemployed who could use these low paying jobs as a start: if they were available. Magical thinking to believe that raising the rate will help the working poor. This is a place where sanctimony and stupidity marry.

GarageMahal: How about surveying the people leaving Walmart and asking if they like the store and the prices. Try it. In the alternative go to your broker and sell short as much Walmart stock as you can afford. Or demand that your pension fund sell all the shares and redeploy those funds into a high wage cost enterprise of your choosing.

The US is an expensive place to live compared to Bangladesh. So, we have three alternatives, we pay a living wage that is higher than the world minimum or we supplement wages by government transfers of wealth or we have a completely desperate underclass of citizens.

I don't like either of the last two alternatives very much and Repubs don't like the second alternative. So, in many respects the first alternative, while not perfect, is the best of a the available alternatives.

Michael said...Magical thinking to believe that raising the rate will help the working poor.

The problem here, of course, is that lifting the minimum wage will carry through to other low wage jobs. This is a typical Repub objection to increasing the minimum wage, which now, for the sake of sophistry, you choose to ignore.

Raising the minimum wage will create a spiral of inflation that will ultimately result in low skill, low pay workers having no more buying power than at the beginning of the inflationary cycle.

My pay rate for high tech work is always 6 to 10 times minimum wage. Raise the minimum wage, and my rate will be raised to be 6 to 10 times that minimum. It's inevitable. I'm worth 6 to 10 times what a no skill worker is worth.

As for who does and does not pay taxes, in Virginia, at $20k/year, the state [not the Feds, note] are taking almost $1000 of that, not including sales tax and other taxes/fees. Now, you might get some of that back after you do your taxes. But, up front, it is gone.

The first random tax calculator I found takes another $1,000 off the top from the Feds (assuming no dependents, only declaring yourself.) That seems wonky, but I'll be a sucker and trust the Internet.

A $15 hourly wage at a 40/week job comes out to... ~$26k/year.

So, huh. Funny how the minimum wage and taxes suddenly is something we have to think about, at least, up front, before deductions.

Tom, aside from your presuming to know the financial circumstances of people I know, you ignore something we should all worry about: the pressure to keep wages low and benefits sparse, (or nonexistent), all in the name of "competitiveness" or to further enrich the Walton family and their despicable ilk, will similarly work to drive down wages and salaries all across the board, or will--as has already been the case for years--drive good (well-paying) jobs out of the country.

This is not just about the presumably lazy-and-shiftless-and-therefore-to-blame-for-their-own-languishing-in-shit-jobs wage slaves, but about all American workers and our disappearing job opportunities.

and by the way, I used to sell robotic welding systems. the selling point was not that the company could fire low wage workers, but take their existing staff and train them better to program robots to do the drudge work. Stopped by to talk to a friend who owns a business and who had bought several of the systems I sold. still the same people who had worked there for the last 15 years. But no new ones, at least in the fabrication department, because the older workers were tending 3 machines machines apiece, and all of the minimum wage types were in shipping, putting product in boxes.

I see where there is a burger making robot that can crank out 360 burgers in an hour. Sure, go on strike, it will make for an easier calculation to decide if the owner wants to buy a Burger-matic 360 or not.

Those who agitate against the presumed unwashed hordes of millions of illegal immigrants pouring through our boarders and into our country, stealing all the jobs from native Americans are in the grips of a fever dream. To the degree there are immigrants--legal or illegal--residing here and doing jobs that might be done for higher wages by American citizens, it is a result of policies driven by the financial interests in the pursuit of driving wages down, because the "job creators" don't want to pay American wages!

Even if we build a Berlin Wall across the whole of our borders with Mexico and Canada, how do we keep the jobs from being automated or sent overseas?

Many people who can't find other work have started their own businesses. Often, those people make very little money, especially in t the first few years. Why would the employees who work for them be entitled to a minimum wage, but not the business owners? Why is one group searching, but not the other? If you truly care about the condition of the poor, why should their status as business owners matter?

"Americans voted for Obama and free stuff, thinking that would solve their problems."

Well, no. They voted for Obama--foolishly--because they wanted something different and better than the truly despicable and miserable cohort of miserable shits who held office for the previous eight years. Obama is just a continuation of of that, with a less overtly or crudely bellicose manner. (And isn't that why we vote, in theory: in hopes we can elect those to office who will represent us to our favor and for the improvement of conditions for all?)

"They are getting it up the ass as a result. They deserve it."

As they were before Obama took office, and as they--we--will continue to do after he leaves office. No one deserves it, but as you seem to hate your fellow human beings, I'm sure you feel "they" do.

agitate against unwashed hordes stealing jobs? (paraphrasing) Yes, I will. It's economics 101. With a large pool of unskilled labor from which to choose, the wages for unskilled labor remain stagnant at best. This is why those businesses that use unskilled labor are fine with amnesty and open borders. duh. And that calculation is not dependent on a party affiliation.

As far as the Republican establishment bringing us amnesty whether we like it or not, I believe that to be true. While it is a Democrat Party idea, it will take the stupid party to get it through.

"When a man tells me about his charitable nature and wonderful ideals...."

One does not need in the least to be charitable or altruistic--and I make no such claims--to be concerned about income inequality or about rising numbers of one's fellow members of society in poverty. The most self-interested person should be concerned about such things because they threaten the stability of society at the macro level and the safety of civic life on the micro level. In other words, increasing poverty and misery will eventually reach all of us in one way or another, whether in the form of the loss of our own jobs or in the increasing barbarity and eventual collapse of the society around us.

" They voted for Obama--foolishly--because they wanted something different and better than the truly despicable and miserable cohort of miserable shits who held office for the previous eight years."

In the middle of the Bush years, I recall news stories of local businesses decrying the lack of available workers. I don't think anybody was getting the minimum wage. Now, we have the lowest workforce participation rate since when? Forever?

I've endured a lifetime as the punitive target of the quota system, so I learned to fight back in every way I could imagine and devise. The ultimate target of the quota systems was always poor white guys from the south and midwest. I realized this way back in college and devised a plan to fight back.

And, I won.

Fuck all you white liberals up the ass. I figured out how to short circuit your asshole game and win. If you don't like it, well fuck you up the ass again.

If you want to know how I did it, it'll cost you. Nobody gave a shit what happened to me except my family, wife and kids. I was always supposed to be the sacrificial victim so that blacks, women and gays can get more.

Nothing of any value is for free.

If you've got no skills and can't earn a living, tough shit. Figure it out on your own. I did.

ARM I believe most are on the same page here except for you and Cook who tend to believe that the small percentage of people on minimum wage should be paid up to twice as much as they are currently making without a corresponding exchange of effort The inflationary ramifications and hiring consequences are not taken into account in your happy sanctimonious world in which you love the poor and do nothing for them whilst conservatives start businesses and hire them and understand fully the cost of doing so.

AReasonableMan said...The US is an expensive place to live compared to Bangladesh. So, we have three alternatives, we pay a living wage that is higher than the world minimum or we supplement wages by government transfers of wealth or we have a completely desperate underclass of citizens.

Notice the reality disconnect.

Even if a mandatory "living wage" imposed by government eliminates lower paying jobs, magically there won't be a desperate underclass.

"If you truly care about the condition of the poor, why should their status as business owners matter?"

Umm...Patrick, it doesn't matter, and...who's decrying small business owners? They're struggling and being swallowed up, too, by the national and multinational corporations and powerful financial interests.

I've noticed how things have gotten worse as the government has passed more and more policies intended to benefit the corporate and financial interests and as they have failed to pursue criminal prosecutions of the corporate and financial interests whose criminal behavior is poisoning the environment and stealing our nation's (the people's) wealth.

ROBERT COOK: Agree that "concern" for the implications of poverty are important. I myself have both concern and a certain amount of altruism in that I spend both time and money on programs that help men get into the work force. But that last bit is not "concern" it is actually doing something. Waltzing around full of umbrage at the banks and bankers and capitalists and warmongers and this and fucking that does nothing for the poor and everything for the person doing the waltz. Concern is bullshit without action and action is not swanning around the internet typing lofty ideas

Apparently ARM doesn't understand ideological purity isn't relevant to my comment since it concerns tone rather than ideology. But we all know to him accuracy and relevance aren't important, only the attack matters.

Yes, garage, we had a housing bubble collapse. Just before the crisis, 58% of all US mortgages were subprime. Fanny and Freddy were buying them up as fast as they could (the Feds held 76% of them), decreasing underwriting standards as HUD jacked up the subprime quotas.

The spectacular ineptness of the last Republican administration's financial management makes it hard to take anything they say seriously. The only thing they are correct about is that the interest on increasing debts will eventually crowd out things we want to pay for.

Reagan/Cheney 'deficits don't matter' when we are in power hasn't been a big help.

To the degree there are immigrants--legal or illegal--residing here and doing jobs that might be done for higher wages by American citizens, it is a result of policies driven by the financial interests in the pursuit of driving wages down, because the "job creators" don't want to pay American wages!

Indeed it is. So make that impossible. Mandate E-Verify. Prosecute people who employ people here illegally. And that emphatically includes the people with the illegal nannies and the illegal landscaping help. It probably means that no high-powered female lawyer with children will get a government job in the near term, but in the long run, some actual American kids might get work as nannies.

EDH said...In fact, that underclass will be made larger and more desperate.

Well no because we will continue with transfers of wealth in the form of food stamps, unemployment benefits and other forms of support.

By allowing our economic system to develop in a way that favors one small sliver of society we have created a bunch of unpalatable options. Unpalatable even for us despised liberals. It would be much better if people received their income directly from their own labor.

As to your last post, I think you slightly miss the point: the loss of good-paying jobs here is far less due to illegal immigrants taking away domestic jobs and far more to do with the transfer of those jobs overseas...or their simple elimination due to automation.

The expulsion of all illegal immigrants from our land would not result in a plethora of good jobs for Americans. It make available some jobs that are as poor-paying as the jobs Americans are already finding, increasing to a minimal degree the number of working poor who are American citizens, but it is not the key to our jobs problem.

That is a result of the reality that "jobs" (good jobs) are a drag on the profits of the "job creators."

Original Mike: You are correct as to the consequences of bipartisan enthusiasm to have universal home ownership. On the other hand, the borrowers were not compelled to borrow and tempted though they might have been to borrow more than they could repay they could and should have resisted on both moral and arithmetic grounds.

Same thing throughout my life. The factory work that my parents thought of as their rightful inheritance disappeared. Computerization is erasing the jobs that my generation thought of as their rightful inheritance.

Economic life is chaos. The error in liberal thought is Big Ideas, thinking that systems can be set in place to control the chaos.

Survival is tough. Each new generation has to learn new survival skills. This is a good thing, although it seldom seems that way to humans in the moment. There is no way to make survival easy, except to devalue the content of your life to boredom. That's a poor tradeoff, but a seductive one.

Sure Michael, but if government hadn't set the table it wouldn't have happened. And the really sucky thing is, they're doing it again. The new Consumer Financial Protection Bureau is pushing for 3% down, low FICO mortgages. We just saw how that worked out the last time, and now we're going to do it again.

The Bush Recession is now in its sixth year. the current pathetic rate of growth cannot be laid at Bush's feet. The chief executive of the country who has seen fit to visit but one time with the head of his most important piece of legislation is clearly not going to be credited with leading any recovery. Speech maker. Talker.

Original Mike said...The housing collapse was a bipartisan clusterfuck. It was intrusive bipartisan government policies that brought the house of cards down.

This ignores the private 'financial advisors' and mortgage agents who were aggressively pushing this shit down people's throats or the role of real estate agents in obtaining loans fraudulently. When these fuckers lost their unproductive jobs it was hard to feel much sympathy - they had extracted their nut from the system. And yes many consumers were also stupid.

Ideology was another major factor. In particular Greenspan's belief in the magic rationality of markets. Somehow, even though the participants in markets clearly act irrationally, the markets themselves would be rational - magical rationality. Ideology blinds people to the bleedin' obvious, in this case a massive housing bubble.

Original Mike: Agree. Underwriting standards for non-minority borrowers remains much stricter than in the boom. On the commercial front the same holds true. CMBS is a fraction of its largest production years and underwriting is much stricter than earlier.

Pretending that an unfettered free market would go out and hand hundreds of thousands of dollars to people who had no way to pay it back without government interference is worse than delusional, it is plain stupid.

If illegal immigration doesn't make any difference to corporations, why should we tolerate it? I don't agree that it makes no difference, fwiw; wages in construction and in landscaping aren't what they were a few decades back, and it's perfectly obvious why.

But if if corporations will just get cheap labor whether there are illegal immigrants or not, oughtn't we at least to make the cheap labor domestic, citizen labor? There are things that aren't outsourceable. Like construction. And landscaping.

How dumb do you need to be not to look at this graph and suspect that 1968 was chosen as the starting point because it was an upward spike?

Probably as dumb as most people that would go to that site and see the graph, I think. Classic confirmation bias with the readers, perhaps even with the author(s) and publisher of the graph itself? I can easily imagine an earnest young progressive blogger doing some cursory research, seizing on some seemingly favorable data and not consciously realizing they were cooking the books. Statistics is fun but tricky.

Here's what I think: Let the job market itself determine wages and salaries

tim in vermont said...Pretending that an unfettered free market would go out and hand hundreds of thousands of dollars to people who had no way to pay it back without government interference is worse than delusional, it is plain stupid.

No shortage of asset bubbles in the past.

If the government's implicit guarantee of the largest banks is a major problem, which I agree it is, then shouldn't Republicans be pushing to break up these banks as fast as possible?

garage mahal said...This analysis by the Federal Reserve should demolish the argument that the CRA had anything to do with the explosion of hallucinogenic mortgage lending. But it won't.

The general concept that those members of society with access to the least amount of capital caused the collapse of the major financial entities of the world's largest capitalist economy is so stupid that further analysis is unnecessary.

30 years ago a good chunk of the people with whom I went to high school and thei families made good wages -- some of them union even -- by working in construction. I've known people from all types: heavy equipment, surveying, drywall, commercial painting, residential construction, pools, concrete, plaster, roofing, lumber sales and service.

Many of those jobs were physical and most depended on an expanding economy. However, present day every job I listed above is dominated now by low-wage illegal immigrant labor. You can't find an American who does carpentry or roofing or drywall or painting. The open-borders crowd got their way and the governments (state and Fed) ignored the influx of "willing to work for less" workers who drove all the tax-paying American citizens out of those lucrative trades. The unions didn't do squat to stave off this tide of illegal scabs. The result is that jobs that were "prevailing wage" (and if you know contracting or construction you'll know that term) in the main are now close to if not minimum wage jobs. I don't blame the Mexicans. I would have done the same thin g to feed myself and my family. But government "policy" that went expressly against the letter of the law is what created this shitty situation.

The current occupant of the Whitehouse is just more lawless and cavalier about the damage than most. And Republicans (the voters) are overwhelmingly against amnesty again. It is to the GOP's detriment that they ignore this cohort and hand us over in toto to the Tea Party. 'Cause the GOP ain't listening to them that brought 'em there. They are listening (as Cook says) to Wall Street and the Big Business.

Mike said...The result is that jobs that were "prevailing wage" (and if you know contracting or construction you'll know that term) in the main are now close to if not minimum wage jobs. I don't blame the Mexicans. I would have done the same thin g to feed myself and my family. But government "policy" that went expressly against the letter of the law is what created this shitty situation.

So employers were entirely blameless in this situation? Such a one-sided analysis cannot be taken seriously.

"If illegal immigration doesn't make any difference to corporations, why should we tolerate it?"

I didn't say it makes no difference; I say it makes only a nominal difference.

My guess is most illegal aliens are working for small businesses rather than for the big corporations. The calamitous job losses in America are not largely due to jobs taken by illegal immigrants, but by the offshoring and elimination of jobs by the multinational corporations.

Are employers who now do NOT comply with Obamacare, as the written law says to, to blame? What if they are acting on the expressed sentiment of our lawless president that he has unilaterally delayed the law a year? Is it delayed? What is the right answer?

In good faith I'll answer you: Of course they share blame. But if all your competitors have cheaper labor than you, your construction business won't last long. If the law looks away then they are encouraging this behavior. Ultimately the blame is on our ruling class.

Anyone with two brain cells should pick up on the astounding hypocrisy of the Hollywood elite: liberal actors preaching lefty redistribution, all the while working in a corrupt system where a smaller and smaller number of actors receive an ever larger piece of the pie; a system where accounting tricks hide as much profit as possible to avoid taxes.

I refer you to a documentary called "That Guy...Who Was in That Thing" - a film that profiles the ups and downs of being a character actor: http://www.imdb.com/title/tt2402200/?ref_=ttpl_pl_tt

Apparently, a character actor could make a decent living a few decades ago. However, the Hollywood pay structure is beginning to resemble the US as a whole: the middle is gone, while a greater and greater share of Hollywood salaries go to a handful of box office draws. A small, elite group of actors is hogging all the resources, leaving crumbs for the rest. Yet these box office draws are trotted out in front of the media, over and over, to shill for the Democrats and their various "fix inequality" schemes.

The general concept that those members of society with access to the least amount of capital caused the collapse of the major financial entities of the world's largest capitalist economy is so stupid that further analysis is unnecessary.

This statement is so utterly stupid on so many levels, the first being that nobody has said such a thing, that I cannot summon the will to respond.

Not the first idiot who has presented this gigantic strawman argument, and probably, not the last.

Those citizens with the least amount of access to capital were given "liar loans" that required no income verification. (Hell the radio practically sung with all the "no verification needed" loan commercials!) And yet the impetus for all this stupid activity, the CRA and the coercion of banks to "make those loans" underwritten by Fan and Fred, is unworthy of blame by our resident socialist radicals? Who'd have thunk it?

Democrats are constantly promoting how they are giving away FREE STUFF! Forcing private for profit businesses to give employees higher wages than they merit is the ultimate Liberal dream campaign. Evil businesses are being forced to give some of their ill gotten profits made on the backs of their minimum wage employees slaving away at hard demeaning jobs. Punishes profits, business, the wealthy and capitalism benefits the poor innocent victims of capitalism. And it's free, since money taking money from wealthy businesses is a good thing.

People, people! The Pope has already explained that "The current financial crisis... originated in a profound human crisis: the denial of the primacy of the human person!" Why are you all going on about this economics and regulation stuff?

My guess is most illegal aliens are working for small businesses rather than for the big corporations. The calamitous job losses in America are not largely due to jobs taken by illegal immigrants, but by the offshoring and elimination of jobs by the multinational corporations.

It's just a guess, though. I doubt it's true. The supply/demand curve isn't a linear equation - remove eleven million people from the bottom of the job market and you may see a dramatic positive change in the lengths employers are willing to go to find and retain employees.

It's all academic, of course. The large corporations and the race lobbies have enough clout to ensure the entry of fresh waves of illegals until poor people in the US are no better off than their counterparts in Rio or Caracas.

Robert Cook: As to your last post, I think you slightly miss the point: the loss of good-paying jobs here is far less due to illegal immigrants taking away domestic jobs and far more to do with the transfer of those jobs overseas...or their simple elimination due to automation.

"Far less". "Far more". As you admit below, you're "guessing" that illegal immigration is simply a negligible factor. Why? The fact is that all of these things contribute to the economic woes of working-class Americans. Who exactly are you addressing here that doesn't understand that there are multiple factors contributing to the employment problems in this country? Ah yes, "those who agitate against the presumed unwashed hordes". Yes, I'm sure that's just about the level of Michelle's understanding, Robert.

The expulsion of all illegal immigrants from our land would not result in a plethora of good jobs for Americans.

It would most certainly improve the wages and job opportunities of a lot of Americans who used to work in sectors that have been taken over by illegals in many parts of the country, regardless of how many jobs have been lost due to other factors.

You really have no idea what you're talking about here, but it's a lovely illustration of how prior ideological commitment can make people so stupid about simple and obvious things.

you're obviously fortunate enough financially to not have to worry about the prevailing minimum wage. For many of your fellow working Americans it is urgently important.

Raise it. Unemployment goes up. Inflation goes up.

Raise it a little, it goes up a little. Raise it a lot, it goes up a lot.

What drives me up the wall is not the liberal urge to help the poor. What drives me up the wall is the liberal incompetence, the inability to understand economics, the simple-minded stupidity of thinking you can pass a law and make people wealthier, the inability to think critically or see any negatives in your urge to control economies.